FinCEN last week finalized an interim rule issued early during President Donald Trump’s second term that exempted US individuals and companies from reporting their beneficial ownership information (BOI) under the Corporate Transparency Act (CTA). Now, FinCEN estimates, only about 28,000 entities, all foreign-registered, will have to comply with the rules.

This is a stunning turnabout from a rule that, when it went into effect in 2024, applied to more than 30 million individuals and corporate entities, from LLCs to S-corps, from mom-and-pop shops to Byzantine real-estate holding structures. 

What happens now? For companies that complied with the rules while they were in effect, a number estimated at about 16 million, the agency said it would commence a one-time deletion process to destroy those records. And, critics say, the US will remain an attractive place to hide ill-gotten gains in opaque shell companies, which is the precise reason the CTA was enacted in the first place.

Michelle Cox noted that the narrowed rule is easily sidestepped. A foreign national who wants to do business in the US need only form a domestic entity — directly or through an intermediary — to fall outside the CTA’s reach, and investing through a foreign pooled fund without exercising substantial control has the same effect. “Given the relative ease of these workarounds, it is difficult to see how the CTA, as currently configured, meaningfully captures foreign beneficial ownership in a way that advances US anti-money laundering objectives.”